Venoco founder closes deal to take firm private

With $471 million in financing, Venoco founder Tim Marquez is taking the oil and gas company he founded private more than a year after his bid to buy up the 49 percent of the company he doesn’t already own.

Venoco, which is based in Denver but has significant operations on the South Coast, announced the close of the deal on Oct. 3, after Marquez was given several deadline extensions to secure financing. As part of the deal, Marquez lined up a $315 million term loan and $156 million in initial commitments on a revolving credit facility.

Marquez owns 50.3 percent of Venoco and made a bid of $12.50 a share for the rest of the firm last summer. While the offer was a big premium on then-current prices, some shareholders accused Marquez of timing his offer when the company was trading at unusually low prices.

But advisers to the company found the deal sound, and Marquez won the approval of the required “majority of the minority” shareholders this summer. Then the question became financing: With markets tight, Marquez required several deadline extensions to round up the capital for the transaction.

Citigroup was adviser to Marquez and acted as lead arranger for the financing. Venoco said that financing consists of the following:

A $315 million senior secured second lien term loan which bears interest at LIBOR plus 7 percent, with a LIBOR floor of 1.5 percent, and has a maturity date of June 30, 2017.

An amended and restated $500 million revolving credit facility, with an initial borrowing base of $175 million and initial commitments of $156 million.

Marquez, who recently handed the CEO position over to Ed O’Donnell but remains the guiding strategic vision behind Venoco, founded the company in 1992 with his savings and a credit card. Since then, he has fought tenaciously to retain control of the firm, whose headquarters he moved to Denver while retaining a workforce of 180 in the Tri-Counties.